R.I.P ERP

Digital Transformation will kill ERP. It is a strong statement but at this time nothing is more certain than change. When giant corporations are created from a basement in San Francisco or a student hall in Harvard, it is not hard to question the future of a software. If Digital Transformation can “disintegrate” enterprises why could not destroy a concept?

Industrial Age x Digital Age

In his excellent text “Old ERP is way past its “Best When Used By” date”, Brian Sommer provokes: “like Monty Python’s Norwegian Blue Parrot, no amount of talking or nailing the poor thing to its perch is going to make it come back to life. Call the funeral home and write the obituary.” In a second text he details his thoughts hitting the heart of ERP structure. Cost Accounting belongs, in his opinion, to the Industrial Era and it teaches people how to determine if any production, cost, scrap or other variances were incurred in the production of an item but this is not relevant if your product is data and “the digital age urgently needs a new cost accounting model.”

“It’s time to put the old ERP solutions out to pasture. It doesn’t many millions or billions your firm spent implementing its ERP system(s), they’re just not relevant anymore”

 Brian Sommer

Corroborating with this requiem Gartner says that “the concept of a single ERP suite that meets all of an enterprise’s needs is dead, and has been replaced by a hybrid ERP approach that combines cloud point solutions with a smaller “core” of on-premises ERP function, such as financials and manufacturings. For them “as alternatives to monolithic, on-premises ERP and enterprise applications continue to mature, CIOs and application leaders must take action to address the fast-approaching reality of “legacy ERP”.

Digital Transformation

Enterprise Resource Planning through the ages

By Cre8tive Technology and Design | CTND.com

For years ERP helped companies to implement “best practices” in terms of processes. However this standardisation, affirms Steve Andriole “makes little or no sense in the era of digital transformation where disruptive business processes and business models are seen as the paths to competitiveness. Disruption and ERP are not birds of a feather”. Back to Brian Sommer, he questioned and answered:

If you were building an all-new ERP today, would it:

• Use sub-ledgers and all the redundant data these possess? (NO)
• Use a relational database for anything but a persistent data store? (UNLIKELY)
• Use Hadoop/Spark and/or in-memory database technology? (ABSOLUTELY)
• Ignore new data types like image files, blobs, blogs, social sentiment data, etc? (NO)
• Better utilize big data? (OF COURSE)
• Reimagine processes to also take advantage of a company’s dark data? (MOST ASSUREDLY)
• Design processes to take advantage of big data everywhere in the process? (YES)

ERP from 2000 and beyond incorporates new components: cloud, mobile and analytics — Sven Denecken, from SAP, would add the power of “network” here, not restricting to social media. These elements are the supporting pillars of Digital Transformation and should be considered for any kind of solution from this moment on.

“Every industry and every organisation will have to transform itself in the next few years. What is coming at us is bigger than the original internet and you need to understand it, get on board with it and figure out how to transform your business”

Tim O’Reilly, Founder and CEO, O’Reilly Media

SAP Offerings 

In my journey to understand Digital Transformation and its impact in businesses, I feel comfortable — a discomfortable word to use. Not because I know where we are going – Google autonomous car seems to be the only one to know – but because I am sure that I embarked in the right ship. Confronting paradigmas I conclude: SAP vision fulfils the requirements of the Digital Economy Era.

To dive deeper into this area, read our blog on Sir Isaac Newton & Design thinking for unlikely origins and lessons that still ring true today.